Earlier this week, I’d explored how investors could look to operate like Warren Buffett in this uncertain market. Today, I want to look at three more stocks that fit within the Buffett investing style. Let’s jump in.
How to follow up another big Warren Buffett bet
On July 27, Berkshire Hathaway revealed that it had purchased another $400 million worth of Bank of America stock. This adds to its significant holdings in the top U.S. bank. Bank of America is Buffett’s second-largest holding, closely behind the tech giant Apple. The vote of confidence in a top U.S. bank should pique investor interest in late July. To follow up this move by Warren Buffett, Canadian investors may want to snag a top Canadian bank stock.
Toronto-Dominion Bank (TSX:TD)(NYSE:TD) is the second-largest financial institution in Canada. Its shares have dropped 14% in 2020 so far. The stock has been mostly flat over the past three months. TD Bank boasts a massive footprint in the United States. Canada’s southern neighbour is battling high COVID-19 rates, but that does not mean investors should stray away from exposure to U.S. assets.
Like its peers, TD Bank has faced huge challenges due to the COVID-19 pandemic. However, its earnings should pick up as North America reopens. It still possesses an immaculate balance sheet. Shares of TD Bank last had a favourable price-to-earnings (P/E) ratio of 10 and a price-to-book (P/B) value of 1.2. This fits with Warren Buffett’s value investing philosophy. Better yet, TD Bank offers a quarterly dividend of $0.79 per share. This represents a strong 5.2% yield.
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Don’t sleep on undervalued stocks
Back in May, I’d discussed why Great Canadian Gaming was a mouth-watering target for investors seeking growth. The hospitality sector has been hit hard by the COVID-19 pandemic. Fortunately, casinos are starting to reopen and revamp their businesses across Canada. Changes will come, but casinos will remain profit machines. Warren Buffett advocates looking for high-quality companies that are undervalued. Great Canadian Gaming fits the bill.
Shares of Great Canadian Gaming last had a P/E ratio of 7.6. This puts the stock in very attractive value territory. I’m still very bullish on this gaming stock going forward.
Warren Buffett: Buy discounted energy stocks
The last big bet by Warren Buffett was a $9.7 billion purchase of Dominion Energy. Enbridge (TSX:ENB)(NYSE:ENB) is an energy stock that I’m still in love with as we look ahead to August. Its shares have dropped 12% in 2020 so far. However, the stock is up 5% month over month.
Enbridge released its second-quarter 2020 results on July 29. The energy infrastructure giant delivered another strong quarter for its shareholders. It reaffirmed its financial guidance range for 2020 of $4.50 to $4.80 Distributable cash flow (DCF) per share. Enbridge maintained its quarterly dividend of $0.81 per share, which represents a tasty 7.4% yield. Moreover, the company has delivered dividend growth for 24 consecutive years.
On the value side, Enbridge last had a P/B value of 1.4. This puts it in solid value territory relative to industry peers.
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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributorAmbrose O’Callaghan owns shares of TORONTO-DOMINION BANK. David Gardner owns shares of Apple. The Motley Fool owns shares of and recommends Apple, Berkshire Hathaway (B shares), and Enbridge. The Motley Fool recommends Dominion Energy, Inc and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short September 2020 $200 calls on Berkshire Hathaway (B shares).